Background to the Political Economy of Spain – Before Recession

This section will examine how Spain’s efforts to join NATO contributed to its eventual participation in the EEC, and subsequently in the EU. Likewise, it is necessary to look at the impact of the Structural Funds given to Spain once it joined, given that these increased output in all industries related to the modernisation of the country’s infrastructure, including roads, railways, airports and ports. Similarly, the recession of 1989-1993 had a detrimental effect on Spain’s economy in all sectors, and the social and political consequences of this exacerbated the growing number of unemployed workers made redundant in the period 1986-1990.

During his leadership as Prime Minister, Adolfo Suárez announced his intentions for Spain to join NATO, as he believed it to be economically beneficial. However, his Union of the Democratic Centre (Unión de Centro Democrático) remained divided over the issue. Suárez resigned his post in 1981, leading to Leopoldo Calvo Sotelo becoming Prime Minister on February 23, 1981. Calvo Sotelo agreed with Suárez’s decision to join NATO, arguing that ‘Spain’s entry into NATO would expedite negotiations for integration into the EC’ (Country Studies n.d.). Spain officially became a member of NATO in May 1982.

Some parties on the left (such as the Socialist Party) felt that NATO had been ‘pushed through’ Government despite protests from many leaders and the public. In order to fight the membership, the Socialist party (PSOE) organised a campaign and their leader (Felipe González) made NATO a major part of his electoral platform, promising a withdrawal from NATO in the event of a Socialist win (Country Studies n.d.).

Calvo Sotelo remained Prime Minister for only 21 months (Independent 2008), and on October 28, 1982 the PSOE won the elections with 48.5% (10,000,000) of the vote. Felipe González became Prime Minister on December 2, 1982 (Independent 2008) and a Socialist leadership began – ‘El primer gobierno socialista’¹ (PSOE n.d.). They would go on to rule for 13 years. Following the election, Spain began to see a dramatic upturn in the country’s economic health; inflation had decreased from 16% in 1982 to 4.5% in 1987 and was thought likely by experts to be close to the government’s goal of 3% in 1988. On top of this, a number of large, unprofitable enterprises were closed down in order to ‘correct’ the poor economic climate. These efforts to ‘modernise and expand the economy’ along with a fall in oil prices, and increased tourism and foreign investment helped produce the economic boom in the 1980s (Imia, K & Weinstein, J. 2000).

In June 1983, the PSOE confirmed that it would still campaign in favour of a withdrawal from NATO, and many anti-NATO protests were held in 1984. However, González had second thoughts for fear that Spain may not be permitted to join the EEC if it were to withdraw from NATO.

On January 1, 1986, Spain joined the EU – then called the European Community of the Twelve (Martín, C. 2000:xii) or the EEC, which is now EU 27² (European Parliament 2010). Overall, this decision to join the EU was a positive one for Spain, which saw an increase of 2.9% of sectors with strong demand and intensive technology between 1986 and 1997. Moreover, sectors with weak demand and low technology saw a decrease from 60.2% in 1986 to 55.2% in 1997 (See Table 1.1).

Table 1.1 Source: Martín, C. 2000:17

On March 2, 1986, two months after joining the EEC, González campaigned for continued, but limited, NATO membership because the Government had warned him of the significant economic damage a full withdrawal would do. The campaign for limited membership won with 52.6% of votes (Country Studies n.d.).

During his leadership, González worked on the three major sectors of the economy; Manufacturing & Industry, Agriculture & Fisheries and Services. The 1990s were known as the ‘década del cambio’³ (PSOE n.d.) as there were improvements to all main sectors: a significant amount of large infrastructural buildings, changes in education programmes (meaning under 16s would get free education) and more health insurance cover, meaning coverage was expanded to the 6 million people who, ‘hasta entonces, estaban excluidas del derecho a la prestación pública’⁴ (PSOE n.d.). Spain saw an average of 5% annual growth between 1986 and 1990 (Travel Blog n.d.), compared to the EU average of 3% (Andalucía n.d.) until Spain was involved in a European-wide recession (Travel Blog n.d.).

Following his mandate as Prime Minister, González’s popularity suffered as a result of the economic crisis, state terrorism against ETA and corruption scandals. On September 4, 1989, Manuel Fraga Iribane – a former Minister of
Tourism during the Franco era – chose José María Aznar to be a candidate for Prime Minister of Spain in the General Elections. Aznar became chairman of the PP in April 1990. Under his leadership of the party, and after six years and two failed elections, the PP won the 1996 elections, making José María Aznar Prime Minster of Spain and marking the start of the Conservative mandate (SFC 2000:A10 cited in Timetables 2011). Upon losing the elections, the PSOE weathered a crisis, leading to the resignation of González as leader in 1997. The popularity of the PSOE continued to fall, before they were badly defeated again in the 2000 elections, receiving only 34.7% of the votes. Aznar successfully brought Spain into the Euro Zone, officially joining on January 1, 1999 (Travel Blog n.d.). Aznar went on to be re-elected in the 2000 elections with 44% of the vote. In the Spanish Cortes (Parliament) they won 183 out of 300 seats (SFC 2000:A10 cited in Timelines 2011). He continued to introduce some tax reforms, reduce unemployment (although it stayed at 10.4%) and advocate privatisation, deregulation and the liberalisation of the economy. This helped Spain come out of recession and begin to see growth (Travel Blog n.d.).

In 2004, Aznar lost the elections to Zapatero, which saw the Socialist Party return to power. Zapatero promised to end eight years of Conservative power as well as looking into the problem of unaffordable housing, job insecurity, and Spain’s military commitments in Iraq and Afghanistan (AP 2004:49 cited in Timelines 2011).

¹‘decade of change’
²‘until then, were denied the right to public provision’
³‘The first socialist government’
⁴European Community of the Twelve was so called because it contained 12 countries. EU 27 currently contains 27.